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Rivals Mad At Ally Bank, Government

October 28, 200912:19 PM ET

Laura Conaway

While GMAC seeks a few billion dollars more in federal assistance (its third round of bailout money), its Internet incarnation is drawing fire for "needling" traditional bankers in ads like the one above — and for offering markedly higher interest rates to depositors.

GMAC's Ally Bank, a Planet Money sponsor, has boasted the top rate in the nation for 12-month certificates of deposit. The national average has been 1.7 percent. At Ally, you can get 2 percent.

The recent ads and rosy rates have drawn $2.9 billion in new deposits. Critics say much of that is "hot" money, meaning customers aren't planning to stick around for the long haul. They just want the highest interest rate, no matter who's offering it.

"GMAC's insolvent, it has been, and I don't know that we can inject enough money into it to fix it," said Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California, firm that evaluates banks for investors. "The company, frankly, needs to be restructured and liquidated."

Whalen estimates that as much of a 1/4 of Ally's deposits are "hot" money.

Last year, GMAC won government approval to become a bank so it could qualify for TARP assistance. Currently the government owns nearly 35 percent of GMAC under the terms of a $12.5 billion bailout of the Detroit-based company.

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